Hagel has ordered the Pentagon to take a hard look at how many soldiers and sailors it needs and what types of weapons it buys. He says the Pentagon is at war with itself: There are competing and spiraling costs within the military — for aging weapons, and for health and pension benefits for military personnel and retirees.

"If these trends are not reversed, former Chief of Naval Operations Adm. Gary Roughead warned, DOD could transform from an agency protecting the nation to an agency administering benefit programs capable of buying only limited quantities of irrelevant and overpriced equipment," Hagel said Wednesday at the National Defense University in Washington.

'Fashioning' New Structures And Practices

Hagel did not get specific about which overpriced equipment to cut or how much to trim military personnel. But consider some of the current costs: The Pentagon spends about $50 billion on health care for active and retired personnel; that cost has more than doubled in the past decade. Then there are the cost overruns for the Joint Strike Fighter that topped $1 billion.

So, Pentagon officials will spend the next two months trying to answer these questions: What are the threats to the United States? And how many people, weapons, ships and planes does the Pentagon need? Hagel says they will look for major changes.

They "involve not just tweaking or chipping away at existing structures and practices, but, where necessary, fashioning entirely new ones that are better suited to 21st century realities and challenges," he said.

Unless it can change the way it spends its money, whether on weapons or health benefits, the Pentagon won't be able to afford its top priorities: cyberwarfare, special operations forces — such as the Navy SEALs — unmanned systems, like Predator drones, and the ships and planes it needs as it shifts its focus to Asia and the Pacific.

Limiting Military Interventions

Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments, says that shift will mean more spending on the Air Force and Navy.

"That seems to be where strategy in the Pentagon has been heading recently, a focus on greater use of air power and sea power, relatively smaller ground forces," he said.

That means the Army and the Marine Corps could face more cuts.

President Obama has said he can't foresee sending tens of thousands of American soldiers to occupy other nations, a clear reference to Iraq and Afghanistan. Hagel picked up that theme in his speech Wednesday. He said U.S. military power must be used judiciously, with a keen appreciation of its limits.

"Most of the pressing security challenges today have important political, economic and cultural components, and do not necessarily lend themselves to being resolved by conventional military strength," he said.

Pressing budget challenges will also not be resolved easily. After his speech, Hagel was asked by a student at the National Defense University whether military health and health care cuts are imminent. Hagel said it's only fair to increase fees, but he sees no immediate cuts to benefits.

The threat from North Korea is just one of many challenges the U.S. faces. In a speech today, Defense Secretary Chuck Hagel talked about how to deal with this and other threats in an era of tight budgets. As NPR's Tom Bowman reports, Hagel has ordered the Pentagon to take a hard look at how many soldiers and sailors it needs and what types of weapons it buys.

TOM BOWMAN, BYLINE: Secretary Hagel says the Pentagon is at war with itself: There are competing and spiraling costs within the military for aging weapons, for health and pension benefits for military personnel and retirees.

SECRETARY CHUCK HAGEL: If these trends are not reversed, former Chief of Naval Operations Admiral Gary Roughead warned, DOD could transform from an agency protecting the nation to an agency administering benefit programs capable of buying only limited quantities of irrelevant and overpriced equipment.

BOWMAN: Hagel did not get specific about which overpriced equipment to cut or how much to trim military personnel. But consider some of the current costs: The Pentagon spends about $50 billion on health care for active and retired personnel. That cost has more than doubled in the past decade. Then there are the cost overruns for the Joint Strike Fighter. They topped $1 billion. So Pentagon officials will spend the next two months trying to answer these questions. What are the threats to the United States? And how many people and weapons, ships and planes does the Pentagon need? And Hagel, in his first major policy speech at National Defense University, says they will look for major changes.

HAGEL: Change that involves not just tweaking or chipping away at existing structures and practices, but, where necessary, fashioning entirely new ones that are better suited to 21st-century realities and challenges.

BOWMAN: Unless it can change the way it spends its money, whether on weapons or health benefits, the Pentagon won't be able to afford its top priorities: cyber warfare, special operations forces like Navy SEALs, and unmanned systems like Predator drones, and the ships and planes it needs as it shifts its focus to Asia and the Pacific. Todd Harrison with the Center for Strategic and Budgetary Assessments says that shift will mean more spending on the Air Force and Navy.

TODD HARRISON: That seems to be where strategy in the Pentagon has been headed recently, a focus on greater use of air power and sea power, relatively smaller ground forces.

BOWMAN: Which means the Army and the Marine Corps could face more cuts. President Obama has said he can't foresee sending tens of thousands of American soldiers to occupy other nations, a clear reference to Iraq and Afghanistan. Hagel picked up on that theme today. He said U.S. military power must be used judiciously, with a keen appreciation of its limits.

HAGEL: Most of the pressing security challenges today have important political, economic and cultural components, and do no necessarily lend themselves to being resolved by conventional military strength.

BOWMAN: Pressing budget challenges will also not be resolved easily. After his speech, Hagel was asked by a student at the National Defense University whether military health care cuts are imminent. Hagel said it's only fair to increase fees, but he sees no immediate cuts to benefits. Tom Bowman, NPR News, Washington. Transcript provided by NPR, Copyright NPR.